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Commodities Declined on Increased Crop Yield Expectations

Commodities declined as favorable weather conditions supported the growing and harvesting stages of grains and softs.


The Bloomberg Commodity Index Total Return decreased for the month, with 13 out of 23 constituents posting losses.

Credit Suisse Asset Management observed the following:

  • Agriculture declined 5.12%, led down by Coffee and Wheat, after beneficial weather conditions increased supply expectations.
  • Energy returned 0.13% for the month. Crude Oil and petroleum products rose after OPEC+ extended their production cut agreement while Natural Gas declined on reduced summer cooling needs.
  • Industrial Metals gained 1.41%, led higher by Nickel, after Indonesia announced plans to enforce a restriction on the export of raw unprocessed nickel ore in January 2022.
  • Precious Metals gained 2.35%, due to higher demand for Silver and Gold as global growth concerns and geopolitical risks increased.
  • Livestock was 2.85% higher, led up by Lean Hogs, after a decline in Chinese hog herd sizes and renewed trade negotiations raised prospects for higher US pork exports to China.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: “While trade discussions between the US and China continued in July, the timing of a trade deal remains unclear. A prolonged negotiation process may be likely. However, as the 2020 US presidential election approaches and economic indicators worsen in China, both sides may face further pressure to come to an agreement. In the Middle East, tensions remained high as oil tankers are facing difficulties navigating off of the coast of Iran. Crude oil and petroleum product prices would likely go significantly higher should the odds of a military conflict increase. Meanwhile, the potential for supply shocks in the other sectors remains as well. Major flooding in the US Midwest in June may have affected the accuracy of data for planted acreage. The August data release may provide answers, and notable differences in corn and soybean yield estimates may introduce significant volatility into these markets. In addition, Indonesia recently announced its commitment to ban unprocessed ore exports, beginning in January 2022, to encourage its own domestic refining capabilities. The pace at which producers will be able to build processing facilities by the deadline remains in question. Delays in these smelting projects may restrict the production of nickel significantly.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added: “Various central banks globally have already cut their key rates in July, with others seemingly planning to do so in future months. In the US, although jobs, consumer spending and manufacturing data remain mixed, the US Federal Reserve (Fed) cut the Federal Funds Rate for the first time since 2008 in an effort to help withstand heightened risks to global growth and in an attempt to target higher inflation. If headwinds to growth persist, the Fed may choose to implement additional rate cuts in 2019. The European Central Bank also signaled its intention to cut rates at its September meeting and restart its bond purchasing program in an effort to support the Euro bloc, particularly as the likelihood of ”Brexit“ progressing became more likely after the election of a new UK Prime Minister. China, meanwhile, may act to implement additional fiscal measures in order to attempt to meet its annual growth target, particularly as the country’s manufacturing PMI reading for June remained in contraction. The dovish sentiment of central banks globally reinforces their commitment to attempt to support growth and stabilize inflation at higher levels.”

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse’s Total Commodity Return Strategy is managed by a team with over 35 years of combined experience, and seeks to outperform the return of a commodities index, such as the Bloomberg Commodity Index Total Return or the S&P GSCI Total Return Index, using both a quantitative and qualitative commodity research process. Commodity index total returns are achieved through:

  • Spot Return: price return on specified commodity futures contracts;
  • Roll Yield: impact due to migration of futures positions from near to far contracts; and
  • Collateral Yield: return earned on collateral for the futures.

As of July 31, 2019, the Team managed approximately USD 6.8 billion in assets globally.

Credit Suisse AG

Credit Suisse AG is one of the world’s leading financial services providers and is part of the Credit Suisse group of companies (referred to here as ’Credit Suisse’). Our strategy builds on Credit Suisse’s core strengths: its position as a leading wealth manager, its specialist investment banking capabilities and its strong presence in our home market of Switzerland. We seek to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets, while also serving key developed markets with an emphasis on Switzerland. Credit Suisse employs approximately 46,360 people. The registered shares (CSGN) of Credit Suisse AG’s parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at

Important Legal Information

This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.

Certain information contained in this document constitutes “Forward-Looking Statements” (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe”, or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.

Certain risks relating to investing in Commodities and Commodity-Linked Investments: Exposure to commodity markets should only form a small part of a diversified portfolio. Investment in commodity markets may not be suitable for all investors. Commodity investments will be affected by changes in overall market movements, commodity volatility, exchange-rate movements, changes in interest rates, and factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Commodity markets are highly volatile. The risk of loss in commodities and commodity-linked investments can be substantial. There is generally a high degree of leverage in commodity investing that can significantly magnify losses. Gains or losses from speculative derivative positions may be much greater than the derivative’s original cost. An investment in commodities is not a complete investment program and should represent only a portion of an investor’s portfolio management strategy.

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